When it comes to retirement, one of the questions I’m asked most often is, “When should I retire?” There are a multitude of factors that go into making that decision and it boils down to your individual situation. There’s no formula that says if you meet a certain list of criteria, you should retire early, or if you check off a certain number of boxes you should retire later. In fact, if you ask Professor Google, you’ll find as many proponents of hanging it up as soon as you can as those telling you to wait as long as possible.
For those thinking a later retirement is for you, here’s a list of perks you may not have thought of.
Decreasing Risk of Dementia
A study from Scotland’s University of St. Andrews found that people waiting until at least age 67 to retire experience less cognitive decline. Researchers analyzed data from 20,000 people in the United States between the ages of 55 and 75.
On average, participants lost about one point on their cognitive scores between age 61 and age 67, which researchers say could be delayed by one-third if you hold off on retirement. They also concluded that the benefit of working longer could last at least five years or more after retirement. Earlier retirement was linked to faster cognitive decline.
You can Delay Tapping into Retirement Funds
If you work longer, that’s fewer years you have to rely on your retirement savings. And it gives you more years of making contributions to your 401(k) and getting your employer match, plus more years of catch-up contributions—that additional amount the IRS allows you to contribute to retirement plans and IRAs when you reach the age of 50 plus the extra years for your next egg to grow.
You Get a Bigger Social Security Check
It’s true that you can begin receiving Social Security as early as age 62, even if you’re still working. But your monthly benefit will be permanently reduced by about 30% if you take it before your Full Retirement Age.
On the other hand, if you continue working and don’t claim your Social Security benefit until later, the amount of your monthly check goes up by 8% between your Full Retirement Age and age 70. After that, it doesn’t make sense to wait any longer.
Better Alignment with Your Spouse’s Retirement Schedule
It’s not uncommon for spouses to have different retirement schedules due to age, good health, or just enjoying the job. Having one working spouse and one retired spouse can create challenges in budgeting, schedules, and household responsibilities. Continuing to work until both are ready to retire means more time to make plans and set expectations that last well into retirement.
Ongoing Social Interaction
Going to work every day has a built-in social structure. You see people, build relationships, have conversations—it’s a type of community. When you retire, that social structure disappears. If you’re a very social person, working longer can satisfy some of your needs to be around people and maintain relationships.
It Gives You Purpose
The worst thing in the world for a retiree is not having a purpose. When I was a kid, I saw people retire after 40 years with a company. They went home and they were dead in a couple of years because there was no reason to get out of bed in the morning.
Continuing to work longer gives you a purpose, a reason to live. At work, you have responsibilities. You have focus. You have a feeling of satisfaction for a job well done.
It doesn’t mean there aren’t other ways to have a purpose after you leave an employer. You can find purpose in volunteer work, starting a new business, or getting involved in a hobby you’ve never had time for. But working longer is certainly one way to find that purpose, too.
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